IKEA’s Road to CSR

IKEA is the world’s largest, multinational, flat-pack home furnishing retail chain. It operates over 300 stores in 48 countries worldwide. IKEA’s highly successful business model is based on low prices, which it achieves by directly controlling strategic resources (e.g., wood, labor) through a large network of suppliers, many of whom are located in developing countries. IKEA has long been a target of environmental activists and NGOs who scrutinize its business practices because of its low cost business model and its use of suppliers in developing nations. In fact, NGOs and other external stakeholders have helped drive the development of IKEA’s CSR programs.

IKEA’s CSR policy was formulated in the 1980s and 1990s because of increased global attention on social justice issues and environmental disasters. In 1990, IKEA hired its first Manager of Environment, and in 1993, the company introduced an official environmental policy. However, in 1994 IKEA was associated with two alarming documentaries revealing the extensive use of child labor in carpet production among IKEA suppliers in South East Asia. IKEA responded to that crisis by including a strong focus on human rights perspectives in its CSR policy, and partnering with UNICEF for advice and assistance regarding child labor issues in IKEA’s supply chain in India. For my case reflection, I choose to focus on two aspects of IKEA’s CSR experience – its reactive use of CSR in response to crisis and criticism, and IKEA’s partnership with UNICEF.

In my presentation, I mentioned that IKEA has been nicknamed the ‘Teflon Company’ because it reacts quickly when its image or reputation is challenged. For example, in the 1980s, poisonous substances were found in IKEA particleboards sold in Europe. That same year, IKEA partnered with a trade union IFBWW (the International Federation of Building and Wood Workers), introduced new requirements for its suppliers, and implemented large-scale testing of its products (Maon, 2010).

The IKEA Corporation appears to be a classic example of the type of company that Vanhamme and Grobben (2009) discuss in their article on the effectiveness of CSR history in countering negative publicity. The authors conducted a study that showed that companies with a long history of involvement in CSR could cautiously use CSR communication as part of their crisis communication strategy. One can point to the long-standing partnership that IKEA has with UNICEF, and the millions of euro that IKEA has dedicated to improving the lives of children worldwide, and say that IKEA has built a very strong CSR reputation.

In researching IKEA’s CSR programs and activities with UNICEF, I came across relevant information on the IKEA Foundation website, in a blog, in IKEA’s annual sustainability report, and in numerous YouTube videos, and social media sites. Consumers, however, will not typically find any mention of IKEA’s CSR programs in its advertising and marketing materials, including the famous IKEA catalogs. IKEA prefers to keep a low CSR profile in its stores and its marketing efforts in order to avoid becoming the target of anti-globalization organizations (Maon, 2010 ). This approach fits in with the Vanhamme and Groben (2008) study that found that Americans considered information about CSR activities that they gain from third-party sources to be more credible than information provided by the company itself. Although IKEA positions the issues of child poverty and child labor as a charity case, IKEA and UNICEF actually do focus a lot of attention, money, and CSR activities on the underlying causes of the issues, unlike the Nike Corporation and its CSR program on Native health (Hayhurst and Szto, 2016). To read more about the IKEA Foundation and its partnership with UNICEF visit the IKEA Foundation website at — https://www.ikeafoundation.org/.